Nearly one-quarter of U.S. households are living paycheck to paycheck, according to a study by the Bank of America Institute released last week.
An estimated 24% of households in the U.S. spend 95% of their income on necessities, the report said, leaving little to nothing left over for discretionary spending or long-term savings goals.
The report is further evidence of a K-shaped economy, where wealthy Americans are faring far better than lower-middle-class and poor Americans. While the study found that there has been little change in the percentage of middle-income and high-income households living paycheck to paycheck, the number of low-income households living paycheck to paycheck has increased from 27% in 2023 to 29% in 2025.
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"Higher income and lower income households are living in two different worlds," Bank of America Institute Economist Joe Wadford told CNN.
A growing wage gap
The rise in the number of households living paycheck to paycheck can largely be attributed to wage stagnation, Bank of America found.
In October, after-tax wages had increased by 2% for middle-income earners and just 1% for lower-income earners, the study found. That's well below the 3% inflation rate, and pales in comparison to the 4% after-tax wage increases of high-income earners.
Wadford told CNN that this wage growth gap hasn't been this extreme since 2016.
The growing number of households living paycheck to paycheck just underscores the country's "deepening affordability crisis," Gregory Daco, chief economist at EY-Parthenon, told CNN.
"This could weaken the foundation of a consumer-driven economy," Daco added.
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Real-world impacts
Vanessa Jones, a 65-year-old nurse living in Davenport, Iowa, told CNN that she took on a second job several years ago to help make ends meet.
"The cost of living is way too high. My savings have been depleted. I haven't tapped into my retirement, but that looks like the next step," she said.
She also pushed back on those, like President Donald Trump, who say there is no affordability crisis.
The affordability issues are "a con job by democrats," Trump told Fox News last week. "Costs are way down."
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However, Jones doesn't buy it. "The people claiming prices are lower are not actually buying their own groceries or trying to find the cheapest place to get their car fixed," she told CNN. "They need to walk in our shoes."
Austin H., a 34-year-old construction worker, agrees with Jones' take.
"To be 34 and living paycheck to paycheck with no savings, things are pretty crappy right now," he told CNN. "We work full-time and have degrees. And we're getting nowhere."
Like Jones, Austin is worried about how the affordability crisis will affect his future. "We want to own a house and start a family, but I don't know how we will ever get our feet under ourselves," he told CNN.
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